Human Resource Management: Gaining a Competitive Advantage Chapter 02 Strategic Human Resource Management McGraw-Hill/Irwin Copyright © 2013 by The McGraw-Hill Companies, Inc. All rights reserved.

Learning Objectives Describe the differences between strategy formulation and strategy implementation. 2. List strategic management process components. 3. Discuss HRM function’s role in strategy formulation. 4. Describe the linkages between HRM and strategy formulation. 5. Discuss typologies of strategies and associated HRM practices. Describe HR issues and practices associated with various directional strategies. 2-2

Introduction Goal of strategic management is to deploy and allocate resources in a way that gives an organization competitive advantage. HRM function must be integrally involved in the company’s strategic management process. A business model is how the firm will create value for customers profitably. 2-3

What is Strategic Management? Strategic human resource management (SHRM) is the pattern of planned HR activities and deployments intended to enable an organization to achieve its goals. Strategic management is a process to address the organization’s competitive challenges by integrating an organization’s goals, policies and action sequences into a cohesive whole. 2-4

Strategy Strategy Formulation Implementation 2 Phases of Strategic Management Strategy Formulation Strategy Implementation 2-5

Strategic Management Process Model Strategy Formulation Strategy Implementation HR Practices Recruiting Training Performance management Labor relations Employee relations Job analysis Job design Selection Development Pay structure Incentives Benefits External Analysis Opportunities Threats Firm Performance Productivity Quality Profitability Mission Goals Strategic Choice HR Needs Skills Behavior Culture HR Capability Skills, Abilities Knowledge HR Actions Behaviors Results Internal Analysis Strengths Weaknesses 2-6

Strategy- Competition Decisions With What? How? Where? 2-7

Strategic Planning and HRM Linkages Administrative One-way Two-way Integrative 2-8

Strategy Formulation External Analysis Opportunities Threats Mission Goals Strategic Choice Internal Analysis Strengths Weaknesses 2-9

SHRM-Strategy Formulation Mission Goals External Analysis Strategic Choice Internal Analysis 2-10

SWOT Analysis for Google Inc. 2-11

Strategy Implementation Variables Organizational Structure Task Design Types of Information Product Market Strategy Performance Reward Systems Select Train Develop People 2-12

HRM’s 3 Implementation Variables: Task People Reward systems 2-13

Strategic Implementation HR Practices Recruiting Training Performance management Labor relations Employee relations Job analysis Job design Selection Development Pay structure Incentives Benefits Firm Performance Productivity Quality Profitability Strategic Choice Human Resource Needs Skills Behavior Culture Human Resource Capability Skills, Abilities Knowledge Human Resource Actions Behaviors Results -productivity -absenteeism - turnover 2-14

HRM Practices Job Analysis/Design Recruitment /Selection Performance Management Recruitment/ Selection Training/Development Pay Structure/ Incentives/ Benefits Labor-employee Relations 2-15

Porter’s Strategies Cost Differentiation 2-16

5 Categories of Directional Strategies Concentration 5 Categories of Directional Strategies Internal Growth External Growth Downsizings Mergers & Acquisitions 2-17

Role Behaviors Behaviors that are required of an individual in his or her role as a jobholder in a social work environment. Different role behaviors are required for different strategies. 2-18

Summary Human Resources are the most important asset and single largest most controllable cost within the business model. HR professionals must develop business, professional-technical, change management and integration competencies. HRM has a profound impact on the strategic plan implementation by developing and aligning HRM practices that ensure the company has motivated employees with necessary skills. 2-19